abc analysis and eoq
TRANSCRIPT
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Presented by
A.Pawan kumar
PGDM 2014-2016
Rollno-15
Presented To
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Vilfredo Pareto
Born 15 July 1848Paris, France
Nationality Italian
Field MicroeconomicsSocioeconomics
Contributions Pareto indexPareto chartPareto's lawPareto efficiencyPareto distributionPareto principle
Signature
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Pareto Principle
“The Vital Few and Trivial Many Rule”
“80:20 Rule”
1950
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The Pareto Principle
• A small number of causes is responsible for a large percentage of the effect
-usually a 20-percent to 80-percent ratio.
• This basic principle translates well into quality problems - most quality problems result from a small number of causes.
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(1)80% of crimes are committed
by 20% of criminals.
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(2)80% of the time we were
20% of clothes.
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(3)80% of the pleasure that we
get from relationshipsComes from
20% of people.
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80% of Complaints comes from by 20% of customers
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counter intuitive
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The 80/20 Principle (or Pareto Principle) according to Richard Koch (Less is More)
Born 28 July 1950London, Britain
Education M.B.A. University of Pennsylvania, Wadham College, Oxford University (M.A.)
Occupation Author, speaker and investor
Employer Self
Notable work The 80/20 Principle
Richard Koch:
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INVENTORY CONTROL TECHNIQUES……..
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INVENTORY CONTROL TECHNIQUES :
OPERATIONAL ASPECT OF THE INVENTORY MGT
REALISE THE OBJECTIVE OF INVENTORY MGT &CONTROL.
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ALL DEPENDS
ON THE
CONVIENIENCE OF THE FIRM TO
ADOPT ANY
OF
THE TECHNIQUES
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Most commonly used techniques………
Two bin system
SDE (Sarce,difference and easy)
FSN(fast,slowand non
moving)
EOQ(economic,order quantity)
Max minimum system)
VED(vital,essential
and desirable)
ABC(always better control)
HML(high
medium and low)
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Copyright 2006 John Wiley & Sons, Inc.
12-21
Classification of inventory items
• Class A
5 – 15 % of units
70 – 80 % of value
• Class B
30 % of units
15 % of value
• Class C
50 – 60 % of units
5 – 10 % of value
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ITEM ITEMS(%) MONEY VALUE(%)
A 10 70
B 20 20
C 70 10
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“A “ Class items (High Consumption Value)
“B” Class items (ModerateConsumption Value)
“C” Class items (Low Consumption Value)
1.Very strict control. 1.Moderate control 1. Loose control
2. No safety stocks or very low safety stocks.
2.Low safety stocks 2.High safety stocks.
3.Maximium follow-up & expediting.
3.Periodic follow-up. 3.Follow –up & expediting in exceptional cases.
4.Rigorous value analysis. 4.Moderate value analysis. 4.Minimum Value Analysis.
5.Must be handled by senior officers.
5. Can be handled by middle management.
5. Can be fully delegated.
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6. 6. 6.
7. 7. 7.
8. 8. 8.
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Economic Ordering Quantity
• EOQ is the amount of inventory to be ordered at one time for purposes of minimizing annual inventory cost.
Formula for Economic Ordering Quantity :
– Ordering Cost: Cost of placing single order.
– Holding Cost: Cost to hold one unit inventory for a year
2Dco/Pci
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USE OF EOQ
AS A PART OF A CONTINUOUS REVIEW OF INVENTORY SYSTEM
MODEL FOR CALCULATING THE APPROPRIATE REORDER POINT AND THE OPTIMAL REORDER QUANTITY
TOOL FOR DETERMINING QUANTITY OF INVENTORY
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EOQ MODEL
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Conclusion :
Economic order quantity method is an highly efficient method so as to overcome In management of inventory difficulties.
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Conclusion Efforts is important,but knowing where to make an effort
makes all the difference!
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Thank u